Wednesday, April 29, 2009

I am pleased to say that more people have been kicked by the invisible boot than any other month since this blog started. On both an absolute and per day basis, my page views have been rising and I am grateful to my readers.

Watching Obama's press conference bit where he was speaking about the need to cover your nose and mouth when you cough and stay home if you have a flu made me feel sad for this country. Have we really stooped to the point where the leader of the free world has to give advice kindergartners should know during a national speech? Will he next tell us that sticking metal objects into light sockets is a bad idea, or maybe that jumping in traffic makes on more likely to get hit by a car. Coming soon to a nation near you:

Tuesday, April 28, 2009

With such a high unemployment rate in this country, one would think that there are plenty people more qualified with lower lower salary requirements than the guy who ran the last gasps of Bear Stearns. Of course this hiring of failure is a hallmark of American oligopoly, with tenure of less than a year bringing in millions. The world seems to have gone mad is all I can say when I read such idiocy.

Thursday, April 23, 2009

It looks like the inevitable is coming as Chrysler is going to file chapter 11 and become Fiat's problem. Hopefully some Italian style will permeate the car company whose most popular models now are a midget clown car and the car with a truck front known as the 300. It also had Dodge which had a decent truck lineup, and little else. Jeep lost its normal client base, women who want a giant vehicle and men who need to compensate but do not want people to ask them to move, and found them moving to larger land yachts such as the GMC Yukon and the Cadillac Escalade. All in all, they had one decent car, the Dodge Neon, but it's early smiley face appearance never made me want to get one.

Friday, April 17, 2009

The question was asked in a comment about the morality of bailouts. The simplest answer is that they are immoral on any level other than some kind of sociopathic Randian viewpoint that all actions in self interest are inherently moral. There are two basic reasons I would give to this assertion, the first being the effect on society from subsidizing failure and the second being the individual's loss of integrity from accepting such a bailout.

On the first point, society is always worse off when the costs of an action are bourne by society but the benefits are privatized. This is the worst of all possible solutions to a problem because the risk incentive is taken out when a third party, namely you and I, pays for the failures of someone else. Instead of bailing out GM and Chrysler, society would be better off with the same money having been used to incentivize new American car companies to create new cars to compete with foreign cars. In my own experience the problem the American car makers have is two fold: one is that they made SUVs because of bad government policy to give tax breaks for SUV's which were labelled flex fuel and also because of short term greed. This led to a model lineup from the two failing firms which got abysmal mileage. The Chrysler PT Cruiser got an EPA estimated 19 MPG in the city. In fact, it had no model in 2007(used as that was when gas prices rose quickly) which got over 30 mpg. Neither did GM in any of its lines other than Saturn(which is ironically the main one they have scrapped). Ford at least had the insight to market a mileage competitive vehicle in the Focus, which is why Ford looks like it could survive without the bailouts. I drive a Mazda because it gets good gas mileage at a low cost myself, and once I can say the same for an American car in the future I will get one. Ford also has a good truck business which has kept it afloat since the F150 is still close to the top of best selling vehicles in the US.

The second reason the bailouts are bas is because they destroy the integrity of the individuals and firms. Once a firm ceases to operate on the profit motive, their purpose for existence as a business is gone. A firm which operates in order to get government money no longer has anything to offer the market, so subsidizing it causes money to be wasted that could go elsewhere, aka opportunity costs. It should be a mark of shame to accept a bailout, instead the car companies clamor for more.

Wednesday, April 15, 2009

Let's see, we have a sign stating that an economic philosophy that wealth should be concentrated in the hands of the owners of capital and then mentioning a religion which preaches opposition to avarice, while wearing a union jacket. I am confused.

Monday, April 13, 2009

Economists tend to fall into one of two camps on minimum wage. One camp, the classically liberal, view minimum wage as always above the equilibrium price since someone will always work at a lower price than the one mandated by government. The other camp, the heterodox, view minimum wage levels as a function of the prevailing labor market, in which it is a minimum set so low that few people if any ever work for it.

Under this view, the minimum wage sets a benchmark which prevents workers from being as victimized by oligopsony and monopsony(few buyers of an input and only one buyer of an input). When there is no minimum wage, then the labor market in rural areas turns into de facto serfdom because the lack of employers means that labor is always undervalued. The friction between the company and the worker in the 19th century in rural areas led to the often violent confrontation between management and labor. Setting boundaries such as a minimum wage helps reduce this strife by keeping workers from being paid the lowest possible wage the market allows, while as the cost of keeping some of the least skill unemployed.

Saturday, April 11, 2009

Thursday, April 9, 2009

This country has once again had a problem with Muslim pirates off the coast of Africa again, which reminds me of the Barbary Wars between 1801 and 1815. The difference two hundred years later is that the US navy, instead of attacking Algiers, is floating around doing nothing. Why not put these ships to some use instead of floating there and have them escort the cargo ships going around Somalia?

I will write on economics some time this weekend, if I can muster the energy after a long first week.

Monday, April 6, 2009

Today is my first day of work at my new full time job. Just before I leave, I saw some more good news I wish to share. Sallie Mae has decided to move 2,000 jobs back to the US from overseas. Though I have chastised them for their bailout money, I give credit to them for doing the right thing this time.

Friday, April 3, 2009

Today I unveil a new recurring section for this blog in honor of the previous president: The "Childrens Do Learn" Education Series. In it I will bring up stories about the education, or lack thereof, occuring in the government schools in this fine country.

With that in mind, today's material brings an auspicious start to the new series, with parents complaining that needing a grade of 70 is too difficult. My favorite part of this article is the parent saying that a 70 is a high grade. I was about the laziest student around, and I got a 79 in AP English without turning in a single homework assignment one semester. Perhaps the problem is not the grading system, but a steady diet of loafing and playing Xbox. Considering that some of the remedial math courses covered seventh grade math concepts such as factoring binomials and basic linear algebra, I do not understand how there are complaints.

The solution is not to lower grades, but to remove athletics from schools. I know this will never happen, since high school football is enshrined in the Texas Constitution, along with idiotically comparing A & M to UT. Why not remove the facade of education in Texas schools and simply have nerds fans the football players and burn the books in an oven to heat the gym? It would save money and finally get our priorities in line with what the average person wants out of a school?

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The Invisible Boot is a site for the day's economic and political news delivered in a straightforward and easy to understand manner. Feel free to comment on anything you like, and especially on anything you dislike.